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Call for Evidence on EPCs

On Thursday 26 July 2018, the government published a Call for Evidence on Energy Performance Certificates.  The deadline for responding is 19 October 2018.  The government is particularly keen for responses from building owners and occupiers (both domestic and commercial), estate agents and others involved in the sale or letting of buildings, anyone involved at any level of the energy efficiency products supply chain (such as EPC assessors, accreditation bodies, software providers and enforcement bodies) and anyone else who regularly uses EPCs.  If that’s you, this is an opportunity to influence how future government policy affects you and your business.

This Call for Evidence comes hot on the heels of the Call for  Evidence – helping  businesses to improve the way they use energy which was published by the government on 18 July and which is open for responses until 26 September 2018.  Both Calls for Evidence are a result of the government’s continued thinking and policy development following the Clean Growth Strategy  published in October 2017.

EPCs

EPCs were originally introduced in 2007, via a European Union Directive, with the intention of enabling individuals and businesses to compare the energy performance of different properties and to use this as a factor in choosing where to live/rent.  However, since then the uses to which they are put have expanded significantly. In particular, since 1 April 2018, the asset rating in an EPC is of critical importance to landlords because of the prohibition against granting new leases, and renewing leases, of premises with a “sub-standard” asset rating (of F or G, shown on a valid EPC).   The government therefore wants to ensure that it understands all the uses (both regulatory and commercial) to which EPCs are now put.  It is also trying to improve their quality, the way in which they encourage building owners to improve the energy performance of existing building stock, and the availability of EPCs.

Quality

The government wants to reduce the degree to which EPCs are inaccurate and/or unreliable and it needs to understand the causes of this and how they can be addressed.  The Call for Evidence contains a number of suggestions, such as improving assessors’ access to relevant data to reduce the number of errors or assumptions made when producing EPCs.  This could mean providing EPC assessors with data from previous EPC assessments, data held by public bodies (such as Building Control and the local planning authority), and possibly smart meter data (although the Call for Evidence acknowledges this may cause data protection and consent issues).

There is also a clear intention to address perceived attempts to “game” the system and obtain a higher asset rating than might be appropriate.  The government thinks that the MEES legislation in particular may have resulted in building owners pressurising assessors to produce inaccurately favourable EPCs, possibly by making it appear that features such as insulation exist when in fact they do not.  Clearly the government wants to prevent this.

Whilst this seems perfectly proper, there may be difficulties in practice.  For instance, an EPC assessor preparing a new EPC on second hand retail space in a “white box” condition cannot currently assume that the future occupier’s fit-out will comply with modern building regulations (he can assume this for newly developed space), and so will have to make worst-case assumptions.  This will often result in the space having a sub-standard asset rating, making it difficult for the building owner to let the space without breaching MEES.  A common solution to this is to install temporary LED lighting, which allows the assessor to displace the worst-case assumption of tungsten lighting and normally results in a substantial improvement in the asset rating.  Preventing that sort of practice will make it much more difficult for building owners to relet second hand retail space in a “white box” condition.

The government also acknowledges that a lot can happen to premises without triggering the need for a new EPC to be prepared, which can mean that an existing, and lawfully valid, EPC may not be accurate as it does not reflect changes since it was prepared.  Several new triggers for obtaining a new EPC are therefore proposed, such as major renovations and minor works (for instance the installation of wall insulation, or the replacement of windows or a boiler), and it is also suggested that there could be triggers linked to renting out a room in a House in Multiple Occupation and to accessing a green mortgage.

How EPCs encourage action

The Call for Evidence asks about how consumers engage with the recommendations reports produced with EPCs, and how this process can be improved.  In particular, the government is seeking views on the Green Finance Taskforce’s recent suggestion that there should be mandatory operational energy ratings, and a public reporting mechanism, building on the (limited) current use of Display Energy Certificates.

The government also wants to make EPCs more relevant in the decision to buy or take a lease of a property, and suggests that property comparison websites could allow users to filter by asset rating.

There is no suggestion in the Call for Evidence that MEES might be made stricter, although we know from other government publications in the past 12 months that this is on the agenda.

Availability

The government wants more EPCs generally. The more EPCs there are, the more useful the data they provide about existing UK building stock and the more effective policies and legislation will be.  MEES, for instance, only applies if there is an existing, valid EPC so one simple way of avoiding it is not to have an EPC at all!

The Call for Evidence seeks suggestions on encouraging building owners and other stakeholders to access and use EPC data and clearly implies that there is a pattern of non-compliance with the current legislation requiring an EPC to be provided on the sale or letting of premises.  This leads to the suggestion that enforcement should be improved (possibly by increased regulation of estate agents and letting agents).

Finally, the government would also like to know whether there are barriers to obtaining an EPC that can be addressed, such as how easy it is to get an assessment undertaking and the cost.  The Call for Evidence recognises that some of its suggestions may result in increased costs, which it says the government will consider when making any changes.

Go on, respond!

It is likely that most developers, building owners and occupiers will have a view on some or all of these topics.  The Call for Evidence is their opportunity to make their voices heard!